January 2003

In This Edition

In the cover story, find out why the federal government’s days of scaling back are over. Fueling the buildup are corporate accounting scandals, the war on terrorism and demands for a Medicare prescription drug program.

Anyone who sets any kind of policy can appreciate the dilemma that faces those trying to prevent construction in floodplains: Is it better to stick to the rules—no matter how harsh—or to exercise discretion under certain circumstances?

The target set by the FOMC for the federal funds rate applies to the entire country. But that single policy has a different impact on different parts of the country, depending on their concentration of interest-sensitive industries.